British ad group WPP said its global clients are investing in their brands in the face of economic uncertainties, supporting its third-quarter revenue even as wage inflation and lockdowns in China tempered its profit growth.
The owner of the Ogilvy, Grey and GroupM agencies reported a 3.8 percent rise to 2.99 billion pounds ($3.46 billion) in like-for-like revenue less pass-through costs and nudged up the bottom of its full-year forecast range to 7.0 percent from 6.5 percent.
But the group, which picked up contracts from Nestle and Samsung in the quarter, was less optimistic about growing its operating margin in light of inflationary pressures, including its wage bill and prolonged lockdowns in China, a Reuters report stated.
It said its operating margin would rise by 30 to 50 basis points this year, against its previous forecast of around 50 basis points.
Google parent Alphabet Inc’s disappointing ad ad sales deepened worries across the digital media sector on Tuesday as advertisers cut back in the face of an economic slowdown.
Alphabet’s warning followed Snap Inc forecasting zero revenue growth on Friday.
But, WPP Chief Executive Mark Read said the group continued to show “strong momentum”, and was doing more than ever for its clients, including e-commerce and digital transformation as well as advertising and public relations.
He said WPP was not comparable to platforms like Snap, which were competing against the likes of TikTok, and were challenged by changes in privacy policies.
WPP’s client base was also different, comprising major companies with strong balance sheets and a long-term approach, he told analysts.
Read said Brazil and India were stand-outs in the quarter, although COVID-19 lockdowns weighed on China, which was down 9 percent.
Western Europe was “softer”, he said, with adjusted like-for-like revenue down 2.1 percent, dragged lower by a COVID-19 contract in Germany in the prior year.
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